Benjamin v. Bierman

Summary

The Nebraska Supreme Court affirmed a district court judgment finding that Douglas S. Bierman and related limited liability companies breached operating agreements by failing to complete the purchase of the decedent's membership interests. The court held that the operating agreements provided an unambiguous method for determining fair market value, upheld the use of an independent appraiser's valuation, rejected the personal representative's request for dissolution for lack of standing, and affirmed damages and interest awards.

Holdings

1. A deceased member's personal representative is not a current member and therefore lacks standing to seek dissolution under statutory provisions requiring an application by a member.
2. An operating-agreement provision permitting transfer of a member's interest by gift or bequest does not transfer governance powers or expand the rights accompanying the transferred interest beyond those provided by the governing statute.
3. Clear and unambiguous contract language must be enforced according to its plain and ordinary meaning; courts may not rewrite the contract, speculate about omitted terms, or use extrinsic evidence to explain an unambiguous agreement.
4. The district court did not clearly err in treating Galloway's appraisal as the fair market value binding under the operating agreements, finding him independent, using December 31, 2014, as the valuation date, and determining that the appraisal was substantially complete by November 30, 2015.
5. The appellees breached their contractual obligation to purchase Mark's interests by rejecting the agreed valuation and refusing to close after the terms of the operating agreements had been met.
6. A court may not award specific performance to a breaching party when the breach is substantial and is not a minor failure of the exchange.
7. The district court properly awarded damages based on the binding Galloway valuation and properly calculated interest beginning 120 days after the appraisal was substantially completed.

Questions Presented

1. Whether Brenda, as the personal representative of a deceased member's estate, had standing under Nebraska's Uniform Limited Liability Company Act to seek dissolution of the two limited liability companies.
2. Whether the operating agreements unambiguously established the method for determining the fair market value of the deceased member's interests.
3. Whether the district court clearly erred in finding that Galloway was independent, that his appraisal was substantially complete by November 30, 2015, and that his valuation was binding for purposes of the operating agreements.
4. Whether the appellees breached the agreements by refusing to close after the agreed valuation process was completed.
5. Whether the appellees were entitled to specific performance despite their breach.
6. Whether the awards of damages and prejudgment interest were proper.

Disposition

affirmed